Investments  

UK services sector expands at quickest rate since 2006

The growth in output from the UK services sector hit its highest level since December 2006 in July, according to the latest data from Markit.

The UK services purchasing managers’ index (PMI) reached 60.2 in July, up from 56.9 in June, with anything above 50 indicating an expansion in the sector.

The expansion in the services sector, combined with the 28-month high seen in the manufacturing sector’s PMI revealed last week, has indicated the UK economy may be returning to stronger growth.

Article continues after advert

The services sector, which makes up three-quarters of UK economic output, was boosted in July by a faster increase in new sales volumes.

Data provider Markit said the growth in new business has put pressures on capacity, which it said should encourage a “further rise in employment”.

Overall optimism in business has also risen, with business confidence hitting a 15-month high as a majority of those surveyed predicted the recent economic recovery to continue.

Ian Kernohan, economist at Royal London Asset Management (Rlam) said the data made an upgrade to the UK’s GDP reading for the second quarter a “distinct possibility”.

Kathleen Brooks, research director at Forex.com, added that the UK “seems to be bucking the recent trend of a global slowdown”, and predicted FTSE 250 companies with domestic UK exposure could outperform the more internationally-focused FTSE 100 companies.